The price of a new electric vehicle in China has nearly halved since 2011, while US and European markets have seen EV prices rise over the same period by 38% and 28% respectively, a new study by JATO Dynamics shows.
Average retail prices for electric cars today are the highest in Europe. In May 2021, the study found that EVs in the UK were, on average, 52% more expensive than ICE cars, and 54% more expensive in the Netherlands. The difference is not as big in Germany, though Norway seems to be the only exception – the average price for EVs in Norway is 44,500 euros (RM220k), compared to 53,000 euros (RM263k) for ICE cars.
Comparatively, in China, the world’s biggest EV market, customers can purchase a brand new electric car for as little as 3,700 euros (RM18k). That’s not a typo, and the adage “you get what you pay for” certainly applies.
In 2011, the average selling price for EVs was 41,800 euros (RM207k), and it has dropped 47% to 22,100 euros (RM109k) this year. China’s success in producing affordable EVs boils down to several factors, including the government’s decision to heavily invest in the domestic market from as early as 2009.
In 2010, the Chinese government announced a trial programme to provide incentives of up to 60,000 yuan (RM39k) for private EV purchases, and 50,000 yuan (RM32.5k) for PHEVs in five cities (Shanghai, Shenzhen, Hangzhou, Hefei and Changchu). The incentives remained in place for 10 years and was due to be phased out by December 2020, but the Covid-19 pandemic forced its extension – albeit at a lower rate – to bolster sales.
In stark contrast, average retail prices for EVs in the US is rising faster than any other major global market. For example, the average EV prices in the US today is 36,200 euros (RM179k), up from €26,200 (RM130k) in 2011. While the new tax credit system has helped accelerate the growth of its premium EV segment, lower income buyers don’t benefit as much, and carmakers are not motivated to produce more affordable EVs.
Just this year, 40% of EVs sold in China were affordable city cars, which had an average retail price of 6,700 euros (RM33k). In Europe, consumers require at least 15,740 euros (RM78k) to drive home a new EV, and in the US it is 24,800 euros (RM123k). Based on these findings, it is clear that Western markets need to catch up with China, or risk falling further behind.
Volkswagen Sustainability Advisory Council member, Ye Qi said: “China has been hugely successful in the race of EV leadership – growing and evolving their model ranges at incredible pace, which is a positive result of a number of factors working in tandem.”
“Unless OEMs in Europe and the US finds avenues to create more affordable EV offerings, they run the risk of losing their home market advantage to Chinese competitors. As the popularity of SUVs has continued to grow in Western markets, the segment looks set to be an important battleground for manufacturers seeking to establish themselves as leaders within the EV market.”
“In the short term at least, government subsidies and incentives will continue to support EV sales, but for how long remains a crucial question for the industry,” he continued. Over to you – if EVs and ICE models were priced similarly in Malaysia, which would you get?
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